Monday, July 11, 2016

How Warren Buffet Hired Ajit Jain To Run Berkshire's Reinsurance Operations and How Ajit Made Billions For Warren

From A.M. Best's Review:

Hiring untested
Ajit Jain paid off for
Berkshire Hathaway

Warren Buffett remembers the day he met
Ajit Jain. It was a Saturday in late 1985 when
Jain first walked into the Omaha office of
Berkshire Hathaway.

They spent hours talking, the billionaire investor
from Nebraska and the unknown from India. By the
end of the conversation, Buffett had learned two
things: Ajit Jain knew nothing about insurance, and
he was exactly the man Buffett wanted to build
Berkshire Hathaway’s reinsurance division.
“After talking to him for a couple of hours, I
knew that we’d struck gold, and that he would be
a great guy to run our reinsurance business,” said
Buffett, the chairman and chief executive officer of
Berkshire Hathaway.

Jain turned out to be one of Buffett’s best
investments.

Over the past three decades, Jain has created a
reinsurance business that has generated billions of
dollars in float, as well as an underwriting profit,
for Berkshire Hathaway. His smart risk-taking
and disciplined decision-making have made him
invaluable to Buffett’s operations.

“He has made Berkshire Hathaway tens of
billions of dollars,” Buffett said. “My partner at
Berkshire, [vice chairman] Charlie Munger, and I
have told the shareholders if we are in a boat that’s
sinking and they can swim and save only one of us,
save Ajit.

“He’s hugely important to Berkshire. It’s
impossible to overstate that.”

Jain, who is widely considered one of the
front-runners to succeed Buffett, has earned a
reputation for taking on liabilities that others can’t
or won’t. With an enormous balance sheet and a
willingness to accept risk for the right price, Jain
has orchestrated some of the most notable deals—
such as assuming legacy liabilities of Equitas and
Brandywine—in the history of the insurance
industry.

For years, he was the man insurers turned to
when they needed deep pockets to get out of
deep problems.

“Whenever the industry has some challenges,
Ajit gets involved,” said Rolf Tolle, Lloyd’s first
franchise performance director and a member of
the board of QBE.

Though he may not be a household name like
his boss, within the reinsurance industry Jain is a
legend.

“He’s one of the most intelligent leaders in the
industry and he commands a sizable wallet,” Robert
DeRose, a vice president at A.M. Best, said. “He
has a huge balance sheet. He has the ability to do
transactions in the industry that no one else can do
or can even come close to doing.

“For the large portfolio, legacy liabilities, he really
is the go-to person.”...MORE